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Abstract
Valuing the Direct Investment Position in U.S. Economic Accounts,
by Ralph H. Kozlow
Presented at the Fifteenth Meeting of the IMF Committee on Balance of
Payments Statistics Canberra, October 21-25, 2002.
This paper discusses the methodologies employed in the U.S. international
economic accounts, in valuing direct investment in prices of the current
period. Under international standards, all of the components of the international
investment position should reflect current period prices, rather than
historical cost or book values. Virtually all of the categories in the
international investment position accounts except direct investment positions
can be directly estimated in prices of the current period with reference
to readily observable market prices. For example, the value of positions
in portfolio investment securities, gold, loans, currencies, and bank
deposits can be directly estimated based on face values or market prices
of recent transactions. In contrast, direct investment positions typically
involve illiquid ownership interests in companies that may possess many
unique attributes - such as customer base, management, and ownership of
intangible assets - whose value in the current period are difficult to
determine, because there is no widely accepted standard for revaluing
company financial statements at historical cost into prices of the current
period.
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Last changed: June 9, 2003
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